Cimarex Energy Co. Accused of Underpaying Gas Royalties

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Cimarex Energy Co. is facing a proposed class action lawsuit that alleges the company made improper deductions from royalties paid to landowners after extracting gas from their wells. According to the case, the plaintiff and proposed class members, under the terms of their contracts with the defendant, were entitled to a percentage of the revenue earned from the company’s extracting, processing, and selling of gas found on their properties.

The suit alleges that the defendant was not permitted to subtract from royalty payments the costs of processing the gas into marketable form, noting that lessors are only responsible for sharing the cost of enhancing the product after it has been processed. The plaintiff further argues that the defendant refused to pay royalties on all the residue gas produced, adding to their alleged underpayment.